In a decisive move, Taiwan’s leading tariff negotiator declared on Wednesday that the island nation “will not agree” to produce 50% of its semiconductors in the United States. This statement directly addresses Washington’s persistent efforts to compel Taipei into expanding chip manufacturing within US borders.
Vice Premier Cheng Li-chiun’s remarks were made in response to US Secretary of Commerce Howard Lutnick, who had publicly suggested a 50-50 split in global chip production between the two nations.
“I want to clarify that this is the US’s idea. Our negotiation team has never made a 50-50 commitment to a chip split,” Ms. Cheng asserted to reporters in Taipei. She further emphasized, “Please be rest assured that we did not discuss this issue this time, and we will not agree to such a condition.”
These comments followed Ms. Cheng’s return from Washington, where she indicated that negotiations concerning US tariffs on Taiwanese shipments had achieved “some progress.”
Taiwan is currently navigating complex discussions to finalize a tariff agreement with Washington. The previous administration under President Donald Trump had imposed a temporary 20% levy, a measure that significantly impacted the island’s manufacturers. Adding to the pressure, Mr. Trump has also threatened to implement a “fairly substantial tariff” on semiconductors imported into the US.
The surging global demand for AI-related technology has dramatically boosted Taiwan’s trade surplus with the United States, inadvertently placing it under the scrutiny of former President Trump. According to a cabinet statement released on Wednesday, over 70% of Taiwan’s exports to the United States consist of information and communications technology, including these vital chips.
To mitigate the threat of tariffs, Taipei has proactively committed to increasing investment in the United States, boosting its purchases of US energy, and elevating its own defense spending to more than three percent of its gross domestic product.
Taiwan holds a dominant position in the global semiconductor market, producing over half of the world’s semiconductors and nearly all of the highly advanced ones.
This concentrated chip manufacturing capability in Taiwan has long been recognized as a “silicon shield,” believed to offer protection against potential invasion or blockade by China, which asserts sovereignty over the island. This strategic importance also provides a strong incentive for the United States to defend Taiwan.
During an interview with NewsNation broadcast over the weekend, Mr. Lutnick articulated the US rationale, stating that having 50% of Taiwan’s chip production in the United States would guarantee “we have the capacity to do what we need to do if we need to do it.”
He continued, “That has been the conversation we’ve had with Taiwan, that you have to understand that it’s vital for you to have us produce 50%. Our goal is to get to 40% market share, and maybe 50% market share, of producing the chips and the wafers, you know the semiconductors we need for American consumption, that’s our objective.”